Digital Brands Group, Inc. (DBG) reported a challenging financial performance for the third quarter and the nine months ended September 30, 2024. The company experienced a decline in net revenues, with Q3 revenues at $2.44 million, down from $3.26 million in the same period of 2023. For the nine-month period, revenues decreased to $9.41 million from $12.13 million year-over-year. Gross profit also fell, totaling $1.12 million for Q3 2024 compared to $1.70 million in Q3 2023, and $4.40 million for the nine months ending September 30, 2024, down from $6.03 million in the prior year.

The company's operating expenses for Q3 2024 were $3.87 million, a reduction from $5.13 million in Q3 2023. However, total operating expenses for the nine months increased significantly to $9.67 million from $5.36 million in the same period of 2023. This led to an operating loss of $2.74 million for Q3 2024, an improvement from a loss of $3.42 million in Q3 2023, but a stark contrast to the operating income of $676,489 reported for the nine months ended September 30, 2023, resulting in a loss of $5.27 million for the current nine-month period.

Net losses from continuing operations were reported at $3.54 million for Q3 2024, down from $5.44 million in Q3 2023, but the nine-month net loss increased to $7.74 million from $4.97 million in the previous year. The net loss per share for Q3 2024 was $(1.63), significantly improved from $(14.55) in Q3 2023, while the nine-month loss per share was $(3.75), compared to $(17.50) in the prior year.

As of September 30, 2024, DBG's cash and cash equivalents surged to $289,346 from $20,773 at the end of 2023, while total current assets increased to $6.40 million from $5.56 million. However, total assets decreased to $23.29 million from $25.34 million, and the company reported a working capital deficit of $16.04 million.

Strategically, DBG has focused on enhancing its brand portfolio, which includes Bailey 44, DSTLD, Stateside, and Sundry, while also launching a new brand, Avo, in August 2024. The company has faced challenges due to supply chain disruptions, leading to increased costs in raw materials and shipping. Additionally, DBG has been actively managing its debt, with an outstanding principal amount of approximately $8.2 million as of September 30, 2024.

The company has acknowledged ongoing concerns regarding its ability to continue as a going concern, given its history of operating losses and negative cash flows. DBG is currently engaged in remediation efforts to address identified weaknesses in its internal controls and financial reporting processes.